Glanbia launches new €100m MilkFlex fund for its milk suppliers in Ireland

Glanbia Co-operative Society has launched a €100m MilkFlex fund for its milk suppliers in Ireland, in order to help protect farm incomes from the impact of dairy market volatility.

The MilkFlex fund will offer flexible and competitively priced loans to Glanbia milk suppliers with loan repayments, which can vary according to movements in milk price. The loans range from €25,000 up to €300,000 for 4,800 of its milk suppliers.

The product has in-built ‘flex triggers’ that can adjust the repayment terms in line with movements in Glanbia Ingredients Ireland’s (GII) manufacturing milk price, thereby providing farmers with cashflow relief when needed.

With a standard term of eight years, the loans will have a variable interest rate of 3.75% above the monthly Euribor cost of funds (with a Euribor floor of zero) and is subject to underwriting criteria.

The term of the loans could be extended by up to a maximum of a further two years when volatility triggers are enacted.

The fund will be made available in three tranches this year, with the first tranche of €50m available from May. Loan repayments will be automatically deducted from the supplier’s milk receipts by GII.

Ireland Minister for Agriculture Simon Coveney said: "I welcome the creation of this innovative funding mechanism and the role of state agencies, including the Ireland Strategic Investment Fund as a co-investor, with Rabobank, Finance Ireland and Glanbia Co-op in making it available to Irish dairy farmers."

Glanbia Co-operative Society group managing director Siobhan Talbot was quoted by Independent.ie as saying: "This product is designed to match the cashflow generated by a dairy farm enterprise, with no repayments during certain times of low prices and increased repayments at times of high prices."

While Finance Ireland will manage the origination of loans from the fund and require a clear business case in order to justify the lending decision, Rabobank, the Ireland Strategic Investment Fund, Finance Ireland and Glanbia Co-Operative Society plan to invest in the fund.

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Image: Glanbia launches new €100m MilkFlex Fund. Photo: courtesy of alex_ugalek via freedigitalphotos.